
Expandable polystyrene (EPS) and polystyrene (PS)
Smarter decision-making with trusted data and analysis
Discover the factors influencing expandable polystyrene (EPS) & polystyrene (PS) markets
A versatile plastic used to make a wide variety of consumer products, expandable polystyrene (EPS) and polystyrene (PS) are integral in industries such as food packaging, appliances, construction, and some niche automotive applications for polystyrene, and for expandable polystyrene construction, white goods packaging, and fish boxes packaging. These industries and more are impacted every day by the dynamics of global and regional PS and EPS markets, as well as developments in the upstream styrene market.
Navigating such crucial industries and markets is challenging. Without the right data and intelligence, you cannot make the best decisions for your business. In ever-changing markets, ICIS enables you to see further and adapt faster. This connects you to what’s happening by providing precision tools, expert insight, and the most up-to-the-minute data coverage around the world.
RELATED LINKS:
Other plastics that we cover
Related industries
Find out how ICIS’ expert data and analytics for Expandable polystyrene (EPS) & polystyrene (PS) help companies in your sector.

Consumer durables and non-durables
Confidently plan ahead with a clear view of demand for raw materials and packaging chains.

Health and Pharmaceutical
Anticipate demand and minimise exposure with industry-leading pricing, news and analysis.

Plastics and Rubber converter
Optimise procurement with an end-to-end view of resins and feedstock supply chains.

ICIS training
Keep up to date in today’s rapidly evolving commodity markets with expert online and in-person workshops and courses covering chemical and energy supply chains and market dynamics. ICIS offers a range of introductory and advanced topics as well as bespoke, in-house training.
Learn about our solutions for expandable polystyrene (EPS) and polystyrene (PS)
Pricing, news and analysis
Maximise profitability in uncertain markets with ICIS’ full range of solutions for EPS and PS, including current and historic pricing, forecasts, supply and demand data, news and analysis.
Data solutions
Learn about Insight, Hindsight and Foresight, our dedicated commodity solutions accessible through our subscriber platform, ICIS ClarityTM or Data as a Service channels.
Expandable polystyrene (EPS) & polystyrene (PS) news
INSIGHT: EU-Chile trade deal could benefit chemicals indirectly via higher minerals supply (part 1)
SAO PAULO (ICIS)–An interim trade accord between Chile and the EU kicked off on 1 February and the 27-country bloc is not shy about its main objective: get preferential access to the Latin American nation’s vast resources of raw materials. Chemicals players on both sides have welcomed the trade deal, although trade in chemicals is likely to remain limited as Chile’s natural trading partners in the sector have always been the US and Asia. Under the terms of the free trade agreement (FTA), 99.9% of EU exports will enter Chile duty-free, whilst EU firms gain equal treatment with domestic companies across Chilean service sectors, including finance, telecommunications, maritime transport, and delivery services. European businesses bidding for government contracts in Chile, Latin America's fifth-largest economy, will receive enhanced market access through streamlined procurement procedures. CHEMICALS: COLATERAL WINNERS?While chemicals companies in Chile and the EU may not feel much of an impact from the trade deal, chemicals players in the 20-million population Latin American economy showed relief that closer ties are being developed with the EU, rather than China. In 2023, the EU enjoyed a trade surplus in chemicals with Chile of €120 million, the result of EU exporting €770 million worth of chemicals to Chile, while the latter's exports to the EU stood at €649 million, according to figures from Europe-wide chemicals trade group Cefic. In a written response to ICIS, a spokesperson for Cefic said three quarters of the EU exports to Chile were consumer chemicals and specialties. In the case of Chile’s exports to the EU, 80% of them were of inorganic chemicals. Cefic said that while chemicals are not at the center of the trade deal, lithium and other minerals as well as metals are, and that could ultimately benefit the chemicals industry if the EU was to achieve a (green) industrial revival. In fact, the interim deal which came into effect on 1 February, which replaced a previous association agreement, included changes and updates to energy and raw materials: the association agreement came into force in 2002: hydrogen and lithium existed already then, but were little spoken about. On the one hand, EU chemicals firms cannot wait to see their energy bills fall, and more so following the 2022 energy and natural gas shock after Russia invaded Ukraine. Chile’s prime position to produce green hydrogen – strong sunlight and winds for the renewable energy, and abundant water – could turn the country into an exporter of the gas upon which most hopes to decarbonize the industrial sectors have been placed. Green energies such as hydrogen have the potential to lower the EU’s high energy bill. Several European companies have announced plans to build green hydrogen plants in Latin America – where costs are lower than at home – aiming to export to Europe most of the hydrogen produced. On the other hand, EU manufacturers are anxious to secure stable supply of the minerals they require to make the green transition the EU itself is pushing them to implement. By having access to those minerals, manufacturing in the EU could see a revival and indirectly push up demand for chemicals. “While EU-Chile chemicals trade is not major in comparison with other trade relationships, trade with Chile is important, especially due to Chile's leading position in the supply of certain raw materials,” said the Cefic spokesperson. “Chile is a key supplier of lithium and copper for the EU, two metals that are key for the EU chemicals industry in applications like cathode active materials for EVs [electric vehicles] or catalysts. In the future, Chile's hydrogen exports can also become even more relevant due to the EU's green transition.” In terms of polymers, Chile’s annual consumption stands at around 1.3 million tonnes, and the country’s output is far from covering even half of that, according to figures by the country’s plastics trade group Asipla. Local production of polymers, said Asipla, stands at 260,000 tonnes, comprising 200,000 tonnes from recycling and approximately 60,000 tonnes of virgin material. Some company names include Petroquim, Chile’s sole producer of polypropylene (PP), or Styropec producing polystyrene (PS) and expandable polystyrene (EPS). Magdalena Balcells is Asipla’s CEO, and one of the most no-nonsense lobbyists this correspondent has met in almost two years in Latin America. In June last year, her straight talk at an industry event captivated the audience – although that audience was, of course, friendly terrain. “Despite China's transition from petrochemical importer to exporter in the past few years, producers like Petroquim have been able to maintain their market position through established client relationships built on trust, certification, and rigor: advantages which are less predictable with Chinese suppliers,” said Balcells. In this interview, like in a previous one in 2024, Balcells insisted Chile’s policymakers tended to think the country is a developed economy where recycling policies could be easy to implement. This push, however, has prompted many plastic companies to get a grip with sustainability, she said, and that can only be a good thing. On trade relations, Asipla’s CEO is crystal clear on her feelings about China. Asked whether a deal with the EU, any deal, will always be preferable to one with China, she said: “Always preferable. The EU and Chile share a common language, a common way of doing business and trade. Chile's OECD membership facilitates European trade relations. With China, everything becomes… very difficult,” said Balcells. “Chinese exports of industrial goods imports continue to present a significant challenge in terms of price competition, across many industrial sectors, in Chile and the wider Latin America. But for Chile, the EU is a very important commercial partner and one with which it is still relatively easy to operate. This FTA should be a positive.” In a written response to ICIS, the head of logistics at Petroquim, Jorge Gaete, confirmed the company does not expect a great impact from the EU-Chile trade deal, but welcomed it nevertheless as it should benefit the Chilean economy as whole and partly protect it from the new protectionist wave. “This FTA is not of great importance for the chemical industry, and we don’t expect it to represent major benefits for Petroquim. This trade deal, however, is important for the issue of minerals such as lithium and copper, which are the great reserves Chile has,” said Gaete. “Moreover, now with the [US President Donald] Trump government and all the reforms he is implementing or planning to implement, including the increases in import tariffs, I believe that we as a country will benefit from the agreement with the EU.” Last week, Trump mentioned tariffs on metals, including copper, which would hit the Chilean economy hard: the country is the second largest producer of copper globally, and its exports are a key employment- and foreign reserves-generator. Chile’s chemicals trade group Asiquim did not immediately respond to a request for comment. This article is the first part of this Insight. The second part, to be published on Wednesday (12 February), will focus on Chile’s vast natural resources, paramount to kick start green mobility and green industry, and the EU’s desire to get hold of as much of them as it can Insight by Jonathan Lopez Front thumbnail: Shipping containers with flags of Chile and European Union (Shutterstock)
11-Feb-2025
Latin America stories: weekly summary
SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 7 February. NEWS US tariffs could jeopardize $800 million of Mexican plastics exportsPotential US tariffs of 25% on all goods coming from Mexico could hit the country’s plastics sector hard, with exports to the US worth $800million, plastics sector trade group Anipac said this week. US suspends tariffs on Mexico for one month as high-level talks on key issues startThe US has agreed to pause for one month its 25% import tariffs on Mexican goods as the two countries agreed setting up working groups on three key issues, the presidents of both countries said on Monday. Brazil's Braskem Q4 resin sales fall 7% quarterly on lower PE, PP demandResin sales in Braskem's domestic market dropped by 7% in Q4 2024 compared with Q3 2024, mainly due to the decreased demand for polyethylene (PE) and polypropylene (PP) explained by the seasonality of the period, the Brazilian petrochemicals major said on Wednesday in its quarterly production and sales report. Brazil’s Unigel appoints Dario Gaeta as CEO after debt restructuring greenlitBrazilian chemicals producer Unigel has concluded its debt restructuring process worth Brazilian reais (R) 5.1 billion ($885 million) after a Sao Paulo business court greenlit the plans drawn up by creditors. Brazil's industry broadly declines in December – trade groupBrazil's industrial activity key metrics slowed down in December, with revenue and production hours both falling 1.3% from November, trade group the National Confederation of Industry (CNI) said on Friday. Brazil chemicals output falls slightly in December; up 3.3% annuallyBrazil’s chemicals output fell by 0.8% in December, month on month, but it rose by 3.3% in 2024, compared with 2023, the country’s statistical agency IBGE said on Wednesday. Brazil’s manufacturing expansion keeps slowing on currency, fiscal woesBrazilian manufacturing continued expanding in January albeit at lower rates than for most of 2024 as currency weakness drove up import costs and dampened demand, though firms remained optimistic enough to hire temporary workers, analysts at S&P Global said on Monday. Mexico’s manufacturing slump deepens as new orders keep fallingMexico's manufacturing sector contracted for a seventh straight month in January as new orders fell at their fastest pace since October, analysts at S&P Global said. Colombia’s manufacturing jumps in January on sharply higher new ordersColombian manufacturing growth accelerated sharply in January as new orders rose at their fastest pace in a year, driving increased hiring and purchasing activity, analysts at S&P Global said on Monday. Brazil chemicals deficit hits $49 billion in 2024 despite higher tariffs by year-endBrazil's chemical industry posted a $48.7 billion trade deficit in 2024 as imports surged to $63.9 billion, driven by “predatory pricing” from US and Asian suppliers, the country’s chemicals trade group Abiquim said. Brazil chemicals producer prices up 12% in 2024Chemical producer prices in Brazil rose 12.2% in 2024 year on year, and above the average for industrial producer prices, the country’s statistical agency IBGE said on Tuesday. PRICINGLatAm PP international prices stable to up on ´higher feedstock costs, squeezed marginsInternational polypropylene (PP) prices were assessed as steady to higher across the region on the back of higher feedstock costs and squeezed margins. LatAm PE domestic, international prices increase on higher US export offersDomestic and international polyethylene (PE) prices increased across the region on the back of higher US export offers.
10-Feb-2025
US tariffs could jeopardize $800 million of Mexican plastics exports
SAO PAULO (ICIS)–Potential US tariffs of 25% on all goods coming from Mexico could hit the country’s plastics sector hard, with exports to the US worth $800million, plastics sector trade group Anipac said this week. Around 75% of Mexican-produced plastics are sold to the US Mexico cabinet, companies hold breath as tariffs threat lingers Some analysts expect GDP to fall by up to 2.5% in 2025 if tariffs remain in place The trade group’s positioning was published after Mexico and the US reached an agreement to put on hold the 25% tariffs for one month. Originally, they were expected to apply from 4 February. Anipac lauded the Mexican government for achieving a partial success but warned that the threat of tariffs remains. According to figures from the trade group, exports to the US represent 75% of all plastics produced in Mexico, but Mexco’s share of overall US plastics imports is only 2%. “The [trade] tension and the result of the imposition of tariffs by our main trading partner will have a direct impact on a decrease in production, loss of formal jobs, and increase in production costs in the vertical integration of manufacturing sectors [in North America],” said Anipac, in a note signed by its president, Marlene Fragoso. “We express our deep concern about President Trump’s strategy of imposing 25% tariffs on all imports of Mexican products as a strategy to put pressure on Mexico to resolve migration and fentanyl trafficking issues, regardless of the agreements under [North America trade deal] USMCA.” Anipac praised the “timely and positive management” of Mexico’s federal government in “this first intervention”, but did not want to claim victory for good as tariffs may be a reality in a few weeks. Moreover, corporate Mexico has been adjusting since November to the idea of a second Trump presidency in which import tariffs – as a strategy to exert pressure or as a reality – are likely to be a key part of the US-Mexico bilateral relationship for much of Trump’s second term in the White House. “We remain in close communication with our peers in the US and attentive to the evolution of this issue,” said Anipac. The trade group had not responded to a request for further comment at the time of writing. One of the polymers which could be greatly affected by a 25% US import tariff would be polyethylene terephthalate (PET), one of the most widely used plastics. The US is a net importer of PET and product coming from Canada and Mexico would be hard to replace. This, in turn, would push prices up, said market sources earlier this week, as any costs related to tariffs would be passed on to customers. IMPORT TARIFFS TO WORSEN SLOWDOWNUS imports tariffs on Mexican goods would deliver a blow to Mexico’s economy. While Mexican plastics producers send around 75% of their output to the US, the overall figure for the manufacturing sectors is 80%. A 25% import tax on four-fifths of all goods made in Mexico sold in the US could send the country’s economy into a long and deep recession, most economists agree. In fact, Mexico’s GDP fell in the fourth quarter of 2024 by 0.6%, compared with the third quarter, while the petrochemicals-intensive manufacturing sectors started 2025 in contraction, the same way they ended 2024. In a note published this week, Spanish bank BBVA, with important operations in Mexico, said the country’s GDP could fall by up to 2.5% in 2025 if tariffs are finally implemented and extend in time. “What economic effects could these tariffs have on the US? The answer depends on various factors, among which the following stand out: the duration of the tariffs, possible tariff retaliations by Mexico and Canada, exchange rate adjustments and the spare capacity in the US to produce the goods that replace imports with the 25% tariff,” said BBVA Research. “What economic consequences the tariffs would have for Mexico? The impact on investment, exports and competitivity could be very adverse. Therefore, there would be a significant downside risk to economic growth in 2025.” MEXICO MANUFACTURING PMI INDEXLast 12 months; reading below 50.0 points shows contraction February 2024 52.3 March 52.2 April 51.0 May 51.2 June 51.1 July 49.6 August 48.5 September 47.3 October 48.4 November 49.9 December 49.8 January 2025 49.1 Source: S&P Additional reporting by Bruno Menini Focus article by Jonathan Lopez Front thumbnail: Trucks at the US-Mexico border (Source: US National Association of Manufacturers (NAM))
07-Feb-2025
Japan's Mitsubishi Motors to invest $121 million in the Philippines
SINGAPORE (ICIS)–Japanese carmaker Mitsubishi Motors Corp (MMC) is set to invest Peso (Ps) 7 billion ($121 million) in the Philippines over the next five years. MMC president and CEO Takao Kato announced the plan during a meeting with Philippine President Ferdinand Marcos Jr on 6 February. The plan includes adding a new production model at the Mitsubishi Motors Philippines Corp (MMPC) plant in Laguna province, according to a statement issued by the Presidential Communications Office (PCO). Kato said the Philippines is MMC’s most important investment in southeast Asia, citing its good and stable economy. MMPC operates a manufacturing plant in Santa Rosa, Laguna, with an annual production capacity of 50,000 units, which can be doubled, it stated. As of November last year, MMPC had a 19% share of the domestic market, trailing behind Toyota's 46% share. Marcos also announced that MMC will be part of the government's Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) program which aims to boost the competitiveness of the local automotive industry. “In the ASEAN, (the) Philippines is our number one market,” MMC’s Kato said. Within southeast Asia, MMC also has production facilities in Thailand, Indonesia and Vietnam. The Japanese carmaker also has manufacturing plants in China and Russia. The automotive industry is a major global consumer of petrochemicals that contributes more than one-third of the raw material costs of an average vehicle. The sector drives demand for chemicals such as polypropylene (PP), along with nylon, polystyrene (PS), styrene butadiene rubber (SBR), polyurethane (PU), methyl methacrylate (MMA) and polymethyl methacrylate (PMMA). ($1 = Ps58)
07-Feb-2025
Dutch regulator fires energy market manipulation warning shot
Dutch regulator 'reprimanded' company over possible market manipulation on TTF gas hub Price manipulation on major benchmark hub can cost other participants, consumers Company in question to be 'closely watched', trader committed to 'no longer engage' in such behaviour Additional reporting by Jamie Stewart LONDON (ICIS)–The Dutch energy regulator has "reprimanded” an international company for "possible market manipulation" at the TTF gas hub, according to a statement released 6 February. The statement was clearly intended to deter market participants from attempting to "mark the close", as it termed the behaviour, adding such behaviour was "an illegal trading practice". It did not reveal the company in question and did not cite any specific penalty. The Dutch Authority for Consumers and Market (ACM) added it would "continue to keep a close watch on the company" and that the trader had pledged to no longer "engage in this conduct". MARKET INFLUENCE According to ACM, the practice of "marking the close" can occur if a market participant influences the reference price on a wholesale energy market by buying or selling close to the moment that a settlement price is determined. This can involve bidding for orders with a much higher asking price or buying excessively large volumes on offer right before the market close, as a result of which the price spikes up. The reverse can also be true, with the price range pushed down by repeatedly offering volumes at a lower price or selling excessively large volumes. As a result of a closing value that does not otherwise reflect market fundamentals or the prevailing price range, other traders, as well as Dutch and other European energy consumers, foot the bill for forward contracts that later settle at this closing price. IMPLICATIONS The cases cited by ACM concerned the short-term Day-ahead contract at the Dutch TTF gas hub. The ICIS TTF Day-ahead is a benchmark price commonly used across the energy industry. The TTF is by far the most traded hub in Europe, and market moves would affect other hubs not only locally but across the continent. Rules across Europe governing energy market trade are laid out in the EU’s Regulation on Wholesale Energy Market Integrity and Transparency which covers market abuse including market manipulation and insider trading. ICIS POSITION Richard Street, international regulatory affairs head at ICIS’ parent company LexisNexis Risk Solutions, said: “We were aware of the issues referred to by ACM. We have strict data standards that allow us to remove any off-market trades. "Market participants who make trades they know are off-market can pre-empt any issues by marking these deals as ‘P&C’ or contact us confidentially to make us aware of the circumstances surrounding unusual activity." Street added it was "clearly disappointing that ACM has had to publicly reprimand certain traders for their behaviour" but he was hopeful that this "sends a clear message that regulators are watching and will take action where necessary”. The Dutch regulator added: it was "calling on market participants and other relevant stakeholders on the wholesale energy markets to share information about possible illegal trading activities. They can do so using ACER’s Notification Platform. See also ACM’s website: Reporting suspicious energy trading." Eduardo Escajadillo EDITOR'S VIEW How price reporting is done is of vital importance to maintain trust in the integrity of commodities markets, and in the price formation process itself. This is important because these markets, in some way, touch all of our lives. Price reporting agencies (PRAs) such as ICIS welcome the support of regulators in ensuring a robust price discovery environment. In this case the Dutch regulator ACM has flexed its muscles, reminding all market participants of their obligations, as well as its own as a watchdog with a duty to consumers. Best practice in the discipline of price reporting is defined by the EU Benchmarks regulation, which as a benchmark administrator ICIS aligns its practices to, as well as the long-standing IOSCO principles of best price for price reporting in commodities markets. ICIS has long been a voluntary signatory to the IOSCO principles and is audited against these principles every year. PRAs best-practice models also lay out how to deal with unusual trading patterns. Central to the approach is transparency if transactions are deleted from a price assessment process, which does happen from time to time. For example, this British NBP gas market comment published by ICIS as recently as 30 January, said: “February '25 trades recorded at the time of the close at the value of 130.500p/th were deemed to be outside of the prevailing range of verified market information reflecting the value of the contract at that time and were therefore excluded from the assessment and ICIS indices.” Our publicly available pricing methodologies, for example our gas methodology, give more details regarding ICIS price reporting practices. Jamie Stewart
06-Feb-2025
Polystyrene foam ban comes into effect in Oregon, US
HOUSTON (ICIS)–Senate Bill 543 was passed in 2023, but it was not until 1 January 2025 that the ban on polystyrene foam was implemented. According to The Oregon Department of Environmental Quality (DEQ), “[The] 2023 Senate Bill 543 (ORS 459.465 to 459.477) prohibits food vendors from using polystyrene foam containers for prepared food, prohibits the sale of polystyrene foam containers or polystyrene foam packing peanuts, and prohibits the sale of foodware containers with added perfluoroalkyl or polyfluoroalkyl substances (PFAS)." “PFAS are a group of chemicals that are considered “emerging environmental contaminants” because public knowledge about their harmful effects and how they are regulated are relatively new or undeveloped. PFAS are water soluble and highly mobile, and can accumulate in living organisms. Many newer PFAS transform into highly persistent perfluorinated chemicals in the environment, and can last for hundreds to thousands of years, depending on the PFAS compound,” according to The Oregon DEQ. What does this mean for polystyrene in Oregon? Well, the bill states that food vendors must not use polystyrene foam containers when selling, offering for sale, serving or dispensing prepared food to a consumer. Examples of this include to-go containers that many use to take home leftovers or to pick up food-orders. This also applies to polystyrene foam plates and cups. Although food vendors must not use polystyrene foam, the bill also states that a person may not sell, offer for sale or distribute in or into the state polystyrene foam containers or polystyrene foam packaging peanuts. Also, a person may not sell, offer for sale or distribute in or into the state a foodware container containing intentionally-added PFAS. The Oregon DEQ noted that businesses with existing inventory of the examples above may not use or sell the material after 1 January 2025.
05-Feb-2025
India’s Supreme Petrochem to start up new ABS unit in Apr-June
MUMBAI (ICIS)–India’s Supreme Petrochem Ltd (SPL) expects to commission the first phase of its 70,000 tonne/year acrylonitrile butadiene styrene (ABS) plant in Nagothane in April-June, a company source said on Wednesday. Another 70,000 tonne/year ABS unit will be added at the site in the western Maharashtra state, in the second phase of the project, the source said. SPL expects the two phases to cost Indian rupees (Rs) 8.5 billion ($98 million), when the project was announced in 2023. “Mechanical completion of the first phase of our mass ABS project is expected by end of March 2025 and commissioning is scheduled for the first quarter of financial year 2025-26,” the source said. The company’s fiscal year begins in April. “There is an available market for domestically manufactured product,” the source said, citing that “nearly over 50% of the country’s ABS requirement or around 140,000 tonnes, is currently being imported”. Separately, the company plans to invest Rs8 billion to build a greenfield petrochemical complex at Karnal in the northern Haryana state. It plans to build a 100,000 tonne/year polystyrene (PS) unit and a 50,000 tonne/year expandable PS (EPS) unit, along with downstream products such as including 3D panels, PS sheeting, extruded PS, among others. “Pre-project activities for that site are going on right now,” the source said. “The new projects will meet increased demand for PS and EPS in domestic and export markets in the years ahead,” he added. SPL can produce more than 300,000 tonnes/year of PS; 118,000 tonnes/year of EPS and other downstream products at its two facilities at Nagothane in Maharashtra; and Manali in the southern Tamil Nadu state, according to the company’s website. ($1 = Rs87.13)
05-Feb-2025
Dow to face margin pressure in Q1 with no help from macros – execs
NEW YORK (ICIS)–Dow expects to face sales and margin pressures in Q1 2025 with no improvement in the macro outlook following a difficult Q4, senior executives said. Dow expects Q1 earnings before interest, tax, depreciation and amortization (EBITDA) of around $1 billion – down $200 million from Q4 – on higher feedstock and energy costs, and higher maintenance activity. On the top line, sales in Q1 are expected to be down 2-4% versus Q4 in Packaging and Specialty Plastics (P&SP), down 2-4% in Industrial Intermediates & Infrastructure (II&I) but up 3-7% in Performance Materials & Coatings (PM&C). Overall Dow sales are expected to decline in Q1 versus Q4 as the declines in the first two segments outweigh the positive impact expected in the third – an unusual occurrence as Q4 is seasonally the weakest period. Q1 guidance does not include any impact from the January winter storm in the US Gulf Coast as Dow’s sites managed well through the event. The 2025 outlook also appears challenging. “While global GDP [in 2025] is expected to grow at similar levels to 2024, recent economic activity is primarily being led by strength in service-related sectors,” said Jeff Tate, Dow CFO, on the company’s Q4 earnings call. “Ongoing affordability challenges also continue to pressure spending in housing and durable goods sectors. These dynamics have created a two-speed economy,” he added. Dow is also monitoring any impacts from ongoing geopolitical volatility, including potential tariffs, he noted. Q4 RESULTS DOWN Dow’s Q4 2024 sales were down 2% year on year to $10.4 billion with volumes up 1% and local price down 3%. Operating earnings before interest and tax (EBIT) fell 19% to $454 million. “We’ve shown five consecutive quarters of [year-on-year] volume growth so we’re still going to take advantage of our low cost position and get our share, but pricing power is the real question,” said Dow CEO Jim Fitterling. On the positive side, ethylene chain – Packaging and Specialty Plastics (P&SP) and ethylene oxide (EO) and derivatives – demand continues to be strong, he said. NEW $1 BILLION RESTRUCTURING Underlying the overall difficult outlook for 2025, Dow is taking further actions to cut costs by $1 billion, including the elimination of 1,500 jobs. Capital spending (capex) will also be reduced by $300-500 million from prior guidance of $3.5 billion. The company also plans to idle a cracker in Terneuzen, the Netherlands, in Q2 until market conditions improve, and will provide an update on its European asset footprint review which focuses on polyurethanes (PU) by mid-2025. Any cost reductions from the European asset review will be in addition to the $1 billion in cost cuts just announced, said Fitterling. HOUSING AND AUTO MACROS PRESSURE PU Dow’s PU and construction chemicals businesses will remain under pressure in Q1 on housing headwinds. “We’re not really seeing any signs of demand recovery despite the interest rate cuts in the US and Europe,” said Dow chief operating officer (COO) Karen Carter, who noted end markets being impacted such as bedding and furniture, along with housing itself. “If you think about US home affordability, it remains at historic lows with [mortgage] rates above 7%. We also saw in Q4 automotive start to slow,” she added, noting that US auto inventories are at 10-year highs. In 2024, global automotive production started strong and ramped up through mid-year and then slowed on inventory pull-downs, said Fitterling. “You could see something similar this year where automotive starts strong again. We just have to keep an eye on what happens to inventories and demand,” he said. Focus article by Joseph Chang
30-Jan-2025
INSIGHT: Trump’s 25% tariff would trigger broad recession in Canada – Oxford Economics
TORONTO (ICIS)–A 25% US blanket tariff on all imports from Canada would push Canada into a recession and raise inflation and unemployment, according to analysis from at Oxford Economics. Broad recession, big job losses Trump unpredictable, uses tariffs to pursue non-trade agenda High household debt, low productivity keep weighing on Canada While President Donald Trump did not go through with his threat of an immediate 25% tariff on Canada and Mexico after taking office on 20 January, he said that a tariff announcement would follow on 1 February, and on Tuesday a White House spokesperson confirmed this. Speaking on a webinar, Tony Stillo, Oxford Economics’ director for Canada, and economist Michael Davenport outlined the impacts of a worst-case 25% tariff scenario, as well as a more optimistic baseline scenario with a 10% tariff on selected imports. 25% TARIFF WOULD TRIGGER RECESSION Oxford Economics’ analysis shows that 25% US tariffs across the board on imports from Canada, along with proportional retaliatory tariffs, would cause Canada’s GDP to fall 2.5% peak-to-trough by early 2026. The tariffs could cost Canada more than 150,000 jobs, according to Oxford’s estimates, but the premiers (governors) of Ontario and Quebec have warned of much higher job losses. Ontario alone, which is the center of Canada’s auto industry, could lose up to 500,000 jobs, the province’s premier has said. About 1.8 million people, or about 8.8% of Canada’s total workforce, work in sectors that directly depend on exports to the US, according to federal agency Statistics Canada. Oxford’s Stillo said that a 25% blanket tariff would not only hit the industrial sectors that trade directly with the US but trigger a much larger hit to output via weaker aggregate demand. Demand would weaken on the back of higher inflation, tighter monetary policy, elevated global uncertainty, and lower business and consumer confidence, he said. Services sectors such as arts, entertainment and recreation, as well as accommodation and food would see large negative impacts as household budgets would be squeezed and consumer confidence would deteriorate, Stillo said. In addition, there would be impacts on the construction and homebuilding sector, he said. The “stagflationary tariff shock” meant that Canada’s central bank, the Bank of Canada, would need to balance concerns over an immediate spike in inflation with a downturn in the economy, Stillo said. If the bank raises interest rates to address the price shock it would deepen the downturn, he noted. He added that the uncertainties caused by Trump’s tariff threat were already affecting business confidence and investment plans. A permanent hike in tariffs would trigger re-shoring from Canada to the US, which was much easier to do than re-shoring from Asia, he said. According to ICIS analysis, with a 25% tariff Canada’s GDP would see a -1.1 percentage point impact in year one, a -4.3 point impact in year two, and a -3.5 point impact in year three. TARIFFS AS A TOOL FOR NON-TRADE PURPOSES Trump’s trade argument for tariffs was weak, Stillo said. In fact, after excluding Canada’s exports of oil and gas, which the US needs, Canada’s merchandise trade surplus with the US was small, he said. Furthermore, after factoring in the surplus the US has with Canada in services trade, Trump was making a “very self-serving” trade argument against Canada, he said. For Canada’s chemical and plastics industry, the US is by far the most important market. The chemicals and plastics sector accounts for more than Canadian dollar (C$) $100 billion (US$69 billion) in annual shipments, with nearly two-thirds of those shipments being exported to the US, according to Ottawa-based trade group Chemistry Industry Association of Canada (CIAC). Stillo said that Trump’s actions were unpredictable, and his immediate objective may be to force an early renegotiation of the US-Mexico-Canada (USMCA) trade deal. The three countries are due to review the deal in 2026. Stillo stressed that Trump was using his “favorite toy”, tariffs, to pursue non-trade related objectives. He went on to note as a recent example Trump’s tariff threat against Colombia in a dispute over the deportation of Colombian migrants. He also reminded of Trump’s recent threats to use economic force to annex Canada as the 51st US state. Trump would continue to use the tariff threat to keep Canada “off-balance”, although the full 25% tariff was unlikely to kick in on 1 February, Stillo predicted. Like Stillo, Canada’s finance minister, Dominic LeBlanc, said on Tuesday that Trump’s policies remained unpredictable, and it was difficult to determine what he wants from Canada. Trump initially linked his tariff threat to an alleged flow of illegal drugs and migrants from Canada to the US; later he cited the US trade deficit, which he called a US “subsidy” to Canada; and he called on Canada to boost its military spending. To top it off, he started to belittle Canadian Prime Minister Justin Trudeau as “governor” of the 51st US state. LeBlanc, speaking to public broadcaster CBC/RDI, said the government had little option but to wait for the expected 1 February announcement and then react accordingly. Meanwhile, Ottawa was preparing to provide relief for workers and industries that may be affected, he said without disclosing details. According to media reports, the government is preparing pandemic-level relief programs. Ian Lee, associate professor at the school of business at Ottawa’s Carleton University, said in webcast remarks that it would be “beyond nonsensical” for Canada to take retaliatory measures against the world’s largest economy. “The idea that we can take on and actually win or hold the US to a stand-still is truly beyond delusional”, he said, adding that only a politician could think this was doable. Instead of engaging in a tit-for-tat trade dispute with the US, Canada should agree to an immediate renegotiation of USMCA, with the objective of getting a new trade deal that eliminates all tariffs, Lee said. Philippe Couillard, who was premier of Quebec from 2014 to 2018 and is now an advisor at a consultancy, told CBC/RDI said that given the size of the US economy and Canada’s dependence on the US, Canada could not engage in dollar-for-dollar retaliatory measures. BASELINE:10% TARIFF Oxford’s more optimistic baseline assumption is for a 10% tariff, on about 11% of Canadian exports to the US – mainly steel, aluminium, base metals, and dairy products. Oxford expects those tariffs to be phased in, with marginal negative impacts on employment in Canada. The tariffs will likely be temporary, lasting until the USMCA renegotiations, Stillo said. Also, Trump was not likely to put a tariff on the more than 4 million barrels per day of Canadian oil going to US Midwest refineries as this would have “a material impact on the US”, Stillo said. “We think that in the end, Trump will realize that across-the-board tariffs on Canada and Mexico would harm the US” as well, he said. Oxford’s current baseline assumptions about the tariffs do “not materially” affect Canada’s economy, Stillo added. However, Oxford will adjust its assumptions, depending on what Trump may announce on 1 February, he said. Stillo also noted that most of the legislative tools Trump could use to hike tariffs require up to six months before they can be implemented. On the other hand, Trump could invoke the International Emergency Economic Powers Act (IEEPA) on 1 February, which allows immediate action, although using IEEPA against Canada may be a “stretch”, Stillo said. There are also indications that Trump may delay tariff action until after the US Secretary of Commerce delivers a report on trade policies on 1 April, Stillo said. MANUFACTURING EXPANDS Surprisingly, Canada’s manufacturing sector continued to grow for a fourth consecutive month in December, according to the latest S&P purchasing managers’ index survey. Companies reported better export sales to the US last month, driven by inventory accumulation ahead of the expected Trump tariffs. At the same time, however, the outlook for Canadian manufacturers remains uncertain as long as the shape and extent of the tariffs is unknown, S&P said. MORE CHALLENGES Aside from the tariffs, the main challenges Canada’s economy faces include high household debt, weak business investment and low productivity growth, as well as a shrinking population because of a more restrictive immigration policy, Oxford’s Michael Davenport said. Household debt was much higher than in comparable countries, largely due to Canada’s overvalued housing prices, he said. Over the past decade, Canada’s economy relied heavily on debt-fueled consumer spending and housing to drive economic growth, which has become “a high-level imbalance”, Davenport said. At the same time, business investment has been weak since the 2014 oil price slump and has contributed to the sluggish productivity growth and weak per capita GDP growth, he said. “We think Canada’s lackluster productivity will remain a major theme in 2025 and into the latter half of this decade”, he said. Furthermore, Canada faces policy uncertainties ahead of a likely change in government, from Trudeau’s Liberals to the Conservatives, he noted. The opposition Conservatives continue to lead in opinion polls about the election, which must be held before October but will likely be called earlier. The Conservatives have promised to abolish Canada’s consumer carbon tax. They have also said they would pursue balanced budgets, cut government spending, and reduce the nation’s debt. Trudeau announced his resignation earlier this month, but he plans to stay on as prime minister until his Liberal party selects a successor, expected by 9 March. Trudeau also suspended parliament until 24 March, meaning that any legislation to address Trump’s tariffs or other threats cannot be passed immediately. (US$1=C$1.44) Please also visit Trump presidency – impact on chemicals and energy Insight by Stefan Baumgarten. Thumbnail photo source: Government of Canada
29-Jan-2025
Eurozone private sector returns to growth in January as inflation heats up
LONDON (ICIS)–Private sector activity in the eurozone returned to a growth footing for the first time in nearly half a year in January, with an expanding service sector counterbalancing stronger but still contractionary manufacturing. Eurozone composite purchasing managers’ index (PMI) firmed to 50.2 in January compared to 49.6 in December, driven by a reading of 51.4 for the service sector, a slight decline compared to 51.6 the previous month but still firmly in growth territory. A PMI score of above 50.0 signifies growth. The manufacturing PMI rose to 46.1, an improvement on the previous month but still a long way from growth. Representing the first modest growth in private sector output since August 2024, the uptick saw employment rates stabilise but input costs rise sharply, resulting in the highest rate of inflation in 21 months. Business activity in Germany, which recorded its second consecutive year of negative GDP growth in 2024, stabilised after six months of private sector recession, while conditions in France remained negative but eased slightly month on month. Ongoing demand weakness limited the pace of recovery, with new orders falling for the eight consecutive month, and new export orders – including intra-eurozone trade – dropping on a monthly basis for almost three years, according to Hamburg Commercial Bank (HCOB) and S&P Global. “Ahead of the ECB meeting next week, news on the price front is not encouraging,” said HCOB chief economist Cyrus de la Rubia. “Worryingly, input prices in manufacturing have increased, ending four months of stable or decreasing costs.” “Given the weak state of the economy, the ECB will likely stick to its gradual pace of cutting interest rates, for the time being,” he added. Despite the intensifying inflationary pressures, the return to growth footing remains a welcome development after months of grim news for eurozone industry, according to Oxford Economics’ Leo Barincou. “January's flash PMIs provides some hope that the eurozone's economic recovery may finally gain some speed,” he said. The UK’s composite PMI also firmed, rising to 50.9 compared to 50.4 in December, with manufacturing strengthening while remaining in contraction at 48.2 and service sector activity ratcheting up to 51.2. The same demand weakness that slowed the rate of eurozone growth made itself felt in the UK, with new work rates falling at the fastest pace since October 2023. Input costs rose, with the rate of inflation the highest in a year and a half. “Inflation pressures have meanwhile reignited, pointing to a stagflationary environment which poses a growing policy quandary for the Bank of England,” said S&P Global Market Intelligence chief business economist Chris Williamson. Thumbnail photo: Frankfurt, Germany's financial centre (Source: Shutterstock)
24-Jan-2025
Events and training
Events
Build your networks and grow your business at ICIS’ industry-leading events. Hear from high-profile speakers on the issues, technologies and trends driving commodity markets.
Training
Keep up to date in today’s dynamic commodity markets with expert online and in-person training covering chemicals, fertilizers and energy markets.
Contact us
In today’s dynamic and interconnected chemicals markets, partnering with ICIS unlocks a vision of a future you can trust and achieve. We leverage our unrivalled network of chemicals industry experts to support our partners as they transact today and plan for tomorrow. Capitalise on opportunity, with a comprehensive market view based on trusted data, insight and analytics.
Get in touch today to find out more.
READ MORE
